SC asks Bengaluru court to decide ZACL plea on Rs 20 cr loan to UB group firm

The Supreme Court Wednesday asked a Bengaluru trial court to decide on the plea of Zuari Agro Chemicals Ltd (ZACL), which had advanced Rs 20 crore as inter-corporate deposit (ICD) in 2012 to a United Breweries (UB) group firm in which fugitive Vijay Mallya has stake.

A bench of Chief Justice Ranjan Gogoi and Justices L N Rao and Sanjiv Khanna, which asked the trial court to commence the hearing within a week from today, took on record the undertaking of Mcdowell Holdings Ltd (MHL), a UB group firm, that it will not alienate or create any third party rights of shares held by it in Mangalore Chemicals and Fertilizers Ltd (MCFL), as ZACL has petitioned.

"Having considered the matter, we are of the view that the just and proper order at this stage would be to direct the trial judge to hear the prayer for injunction made in the suit within a week from today," the bench said, adding that the trial Judge shall also consider the contentions of MHL with regard to maintainability of the suit.

ZACL has challenged in the apex court the Karnataka High Court's January 28 order which stayed a lower court's interim decision asking Mcdowell Holdings Ltd to not sell or alienate its shares of MCFL.

As per the appeal, after several renewals of the ICD, Mcdowell Holdings Ltd pledged certain shares of its group firm MCFL to lending firm ZACL.

Even after the pledging of shares, the lending company said that the debtor firm owed it Rs 17.87 crore.

ZACL went to the civil court and got an order asking Mcdowell Holdings Ltd, not to sell or alienate its shares in MCFL.

However, after the Karnataka High Court's stay on the order ZACL has moved the apex court.

The high court had said that the lower court's order was "a cryptic order bereft of any reason".